Gen Z's 'Natural' Power Is Vast & An Early Take On Expo West

0:10Hello and thanks for tuning into Taste Radio, the number one podcast for the food and beverage industry. I'm Ray Lateef, the editor and producer of Taste Radio, and with my co-host for this episode, John Craven, Jackie Brugliera, and Mike Schneider. We are recording from three distinct places across the United States today. I am in Vail, Colorado, Jackie in San Diego, and Mike and John in the usual spot of Newton, Massachusetts. Not as exciting. Not as exciting. Sorry. Sorry, yeah. What do you think of my fit, my Vail fit? Very Colorado. Never have seen you in a vest. Did you suddenly become an investor?

0:48I was going to say, he's a venture capitalist. Yeah, I think this is my calling is to wear this kind of clothing such that I become a VC investor or private equity investor. And, you know, all I need is what? $20 million to get started. So if anyone's listening and they want to front me some cash, please let me know and send an email to ask. Actually, don't send an email to ask because then John's going to find out. That's going to be weird. It's going to be weird. Don't send us that email at all. Please don't. Yeah. I'm in Vail, which is the home of Manitri, which is a private equity firm focused on the future of human health.

1:25They held a leadership summit over the past couple of days where they invited the leaders of portfolio companies, including Gotham Greens, HealthAid, The New Primal, Good Culture, and True Food Kitchen, as well as Verde Farms. And there were some speakers who talked about industry trends, news information as it relates to how the food and beverage industry is evolving. And then, you know, a bunch of the time was also spent as a powwow for folks to get to know each other a bit better and talk about strategies for 2024 and beyond. I recorded interviews with a bunch of the CEOs. They will be forthcoming in future episodes of Taste Radio.

2:06So, I mean, in terms of the speakers, some really interesting takeaways from folks like Nick McCoy, who is one of the co-founders of Whipstitch Capital, which is a Massachusetts-based investment bank. Everyone knows Nick. John, you've known Nick for some time, yes? Sure. Yeah. Sure. Okay. I mean, it's like hitting me with the real tough questions here. I'm just sitting here thinking, why did we send the guy who doesn't ski to bail? I know, I know. That's what we're all thinking over here. I'm like, Ray is going to go nowhere near the most famous place in Vail. He thinks mandatory is the most famous thing in Vail.

2:44Ray would also be one of those, like, he'd have like a one-piece suit that's just white. That he skis in. Like a snowsuit, yes. I intended to ski. He's like in a powder blue or a Manchester United snowsuit. And he's just wiping down all the lifts with like his Lysol wipes. I intended to ski, but my flight home got canceled. And so they had to give me an earlier flight. Do you ski, Ray? No. You're going to give it a go. I apri-ski as much as possible. You're going to start skiing at Vail. That's probably the best place to start. I'm sure they have great lessons and plenty of varied terrain. Oh, my God.

3:20I'm so jealous. That was my plan. That was my plan was to go skiing this morning and get a couple lessons. Hope that I don't break my neck and fly home. But my plan was thrown off. Breaks his neck in a beginner lesson. That's a new one. Ouch. Yeah, partly because I have to talk to you guys about, you know. Ah, so we're taking over your ski time right now. Exactly. Exactly. I hope the truth comes out. Sherlock, Jackie, hope you're coming back with some of those down vests for the rest of us. Down vests? This thing? I had to buy this myself. What? Yeah, what do you think? They just give these away at Veil?

3:55Like when you come off the plane, they just start handing out a down vest conference. I thought that was from the down vest conference. I thought it was like Hawaii when they give you a lay when you get off the plane. Does a mandatory have like six swag to hand out? No, I just wanted to fit in. And so here I am. I think you're accomplishing it. Yeah, I think so too. All right, anyway, back to Nick McCoy. Sorry. Start writing checks and we'll see what happens. So Nick McCoy, along with Mike Bergmeier, the co-founders of Whipstitch Capital. And so in Mike's presentation - Hey John, do you know Mike Bergmeier?

4:23I've heard of Mike Bergmeier. Oh, for crying out loud. Here we go. I think we've been to his house once to record an episode of this podcast. Yes, we did. True story, true story. So some of the key takeaways, VC investors are deploying less capital than before COVID, which was a little eye opening. The NPI recession, as in the natural products industry recession, is over and consumers are moving back to better for you. As we know, there was a time when everyone was going back to these comfort legacy food brands. And it seems like, according to Nick and data that he pulled from Nielsen IQ, that people are more interested in healthier and better for you products.

5:06What was interesting about some of the key attributes of some of these better for you products was that there was a hierarchy of importance to consumers who shop natural and organic. And at the top of the list was just the common attribute of natural. Do you know what the second most important attribute to consumers of natural and organic products or more specifically better for you products is after natural. Would it be function? It is not. It is sustainable packaging. Really? Yes. Huh. I didn't know consumers are that hip yet. Did they panel the taste radio team? Jackie, you sound like me dropping words like hip.

5:55And that's from a survey? This is from Nielsen IQ Data. Actual data, okay. Actual data, yes. Okay. The third most important attribute is environmental sustainability, then clean label, then social responsibility. Better for you was next. Plant-based was second to last. And guess what was last? Taste. GMOs. No, taste was interesting. I asked Nick about taste, but it wasn't taste. It's organic. Organic was last. they're not looking as intently for things that are organic as they might be, I guess, for sustainable packaging. Isn't that part of clean label? No, I guess not. Who knew? Who knew? Who knew?

6:37I want to see who designed this survey. Well, you can talk to the folks in Neal's and IQ because they're not very well known. They're a small company, haven't been around very long. They don't know what they're doing when it comes to surveys. You know, they haven't been doing it for years and years and years and years or anything. You have reason to doubt them. for sure. I think it's interesting because like, I don't know, I feel like there's still some improvement as far as brands go and companies go on their packaging. Consumers are looking for this, but are they actually finding the sustainable packaging that they're looking for?

7:09Doubtful. That's a good point, Jackie. But I think it is putting an onus on emerging brands and legacy ones as well to think about sustainable packaging as they're developing their brands. Because as Nick pointed out, younger consumers are a powerful force for sustainability. Right now, you see a big percentage of people who are buying brands that embrace environmental sustainability and sustainable packaging on the younger end of consumers. And he noted that when these consumers start to enter the workforce and get better jobs and make more money, they're going to have even more of an impact on the industry as a whole and demanding things like sustainability and environmental friendliness.

7:57Well, this also goes back to what Jackie just said was really key here. Are they finding what they're looking for? And I think it sounded like in that survey that people were prioritizing the things that they can't find and that the things that are lower down in the survey have become more table stakes are easy to find. So they're not saying it's their priority anymore because it's there. Possibly. I'm not sure. You shouldn't put a couple of marketers together to talk about a survey, right? Because we're going to talk about the design. We're going to talk about the SKU. We're going to talk about, I mean, it's fascinating.

8:31Yeah. Or you should, and it should be another podcast. Well, if you want to follow up with Nick about that, it was one of many slides that he shared as part of his presentation. There was another really interesting speaker that we heard from at the summit. His name is Andrew Petz, who is the M &A director for General Mills. He was pelted with questions and, I guess, comments from those in attendance. Some of the things that he talked about, I think, might be hard to hear as the founder of an emerging and disruptive company. but he did note that emerging brands will always matter to big CPG. The question is, can big CPG, in this case, General Mills, do it ourselves?

9:19Can we get a foothold? Can we buy it? He also noted that General Mills and probably by extension, other strategic companies are not good at scaling$25 million acquisitions, which is probably why you're not seeing a lot of that in the M &A space, or at least of late. I'm not going to mention the name of the brand, but it's a well-known cereal brand in our space that has done pretty well. Great revenue, seems to have a ton of loyal consumers. And from what I took from the conversation is that they've been shopping the brand around, but no one's biting. And it's because their valuation is too high.

9:57And the reality is that a lot of these strategics are thinking about whether or not they can create the same product with a lot less capital and just do it internally. And it seems like that is a real risk for emerging brands in that, yeah, you might have a great customer base. You might have a brand that's at the tip of the tongue of many consumers, retailers and investors. But if there's no acquire, you know, it's like the, you know, if a tree falls in the forest, does anyone really care kind of thing? I don't know if that's the best comparison, but it was really interesting to hear about that.

10:35I mean, you might as well have just said magic spoon there. Yeah, I was gonna say, is it a brand that rhymes with Tragic Loon? I didn't say anything.

10:47Also at the summit was the one and only Holly Adrian. and everyone knows Holly, who heads up Natural Organic and Innovation for Kroger. This was kind of interesting. Did you guys know what the number one natural organic brand in the world is? I bet Holly knows. She should, yeah. Any takers? None? It's a$3 billion brand. Enlighten us, Ray. It is Simple Truth, which is the Kroger-owned brand. It's their private label brand for Natural Organic. Nice. And definitely interesting to think about how branded products fit into the Kroger, I guess, ecosystem when that is such a big part of their business.

11:32but you know she did note that she's always talking to better for you brands and emerging brands in the natural organic space always championing those brands just that when folks are pitching Kroger and pitching her specifically you want to be specific about what part of their business that you are looking at and what kinds of categories you're targeting because Kroger's a humongous company. It's like a multi tentacled company with lots of different banners, lots of different categories that they're focusing on. And so she's like, look, you got to do your homework. You got to know about our business.

12:10You got to know about what value you can bring to Kroger as much as you are pitching your own brand. I know that sounds really basic and simple, but I don't think it's something that a lot of people think about as much as they probably should. Yeah, I feel like brands are a great opportunity for a retailer to just bring in new consumers for trial or your own consumer base. I mean, it sounds like they're doing a great job with their private label, but that doesn't lead to growth. They're hitting people that are already in their stores, you know, looking for that product, but they might be interested in trying something new that day or someone might enter the store that didn't previously because they're looking to get their favorite product.

12:51that's a good point jackie and one of the things holly touched on was how kroger is investing in and working on digital more often than they had in the past because it seems like digital is a way to boost awareness and enhance the sort of i guess availability of natural organic brands in their stores so you know sometimes when you shop on like an instacart and i'm not picking on instagram i of Instacart, but you're looking for a specific product that you know is in their stores, you know is in a Kroger or a Stop and Shop or a Wegmans, and you're like, I know it's there, but for some reason I can't find it on Instacart.

13:32That doesn't really help these brands and doesn't yield the kind of awareness that is going to benefit, I think, the industry as a whole, the natural organic industry. So they're working on that and they're investing in that, which is great to hear. Someone asked her, Holly, that is, about some expectations and predictions for Expo West, which was really fun to hear. Nobody wants to hear about that, though, right? So let's just move on. No, I'm kidding. I'm kidding. I'm kidding. It's ranch everything, right? Give it to us. Okay. So she noted that nostalgia and comfort food is something that she expects to continue to be an important trend.

14:08Better for you, for sure, but not necessarily great for you. So I think people are, and consumers that is, are more comfortable with the fact that a product might be better for you, but is not like the best thing for you. It just has to taste great. It has to evoke or elicit some sort of feeling of love and happiness. And, you know, I think that's kind of where the whole nostalgia thing came from is people just wanted to feel comfort. Lots of better for you candy products that fit into that bucket. Yeah, for sure. For sure. gut health, she mentioned, and plant-based. Plant-based was another thing that came up quite a number of times in the past couple of days, but sort of a plant-based 3.0 where consumers want whole food ingredients.

14:53They want less ingredients and more clean label ingredients, specifically as it relates to plant-based food. Anyone for a mooski? Sounds like Eric's planning mooski. I'll take one. Yeah. Going back to Nick's presentation for a second, And he talks about how the number of ingredients in products is actually rising. And this is all, again, based on that Nielsen IQ data. But consumers are looking at those ingredients more closely. So you could have a ton of ingredients. And if they're all clean label or perceived to be clean label, it's fine. And I asked Nick, why do you think we're seeing more ingredients?

15:30Is it tied to better taste? You know, people just want a better taste. And, you know, a way to get to that is to have more ingredients. You said, yeah, it's likely that that is driving a higher number of ingredients and products. One other thing from Holly's talk was, you know, it's interesting to think about the benefit of a product versus a free from product. And what I mean by that is instead of saying, oh, we don't have this, you know, we do have this is more enticing to consumers. So brands that keep saying, oh, well, we don't have gluten or we don't have Stevia or we don't have this, we don't have that.

16:10It seems like consumers are like, well, it's great that you don't have that, but what do you have? You know? And so I think consumers are moving in that direction, according to Holly. And are we in our daily standup, Jackie? Sounds exactly like what we talk about all the time. Well, there you go. Don't talk about what you're not. Let's talk about what you are. And also just do that in the simplest way possible. and if you're trying to explain too many things, then you just don't know what you are. Yeah, and often when you're talking about what you're not, you have to go back to then talk about what you are.

16:42So it's like a more complicated conversation rather than just focusing on the benefit or having a clear, concise message. Absolutely. All right, well, as I mentioned, a lot more coming from this summit in the next few weeks on Taste Radio. Look for those interviews coming soon. one thing I didn't see at the events, and I was a little disappointed because I felt like I needed, you know, you have these long trips going out to the West Coast and your cognitive function is just not what it is when you were back East. And so I needed a dose of Cognizant in my life. We just need more. We just needed to blanket the United States with Cognizant.

17:21And I say that because I love Cognizant, but also because they're the presenting sponsor of this episode of Taste Radio. Cognizant is a clinically tested nootropic ingredient that delivers a patented form of citicoline to supply your brain and those of your consumers with the energy it needs to stay sharp. Learn more at cognizant.com. That's C-O-G-N-I-Z-I-N.com. Someone clearly needs some cognizant because they are in Vail and think they're on the West Coast. But hey. Close enough, you know. I don't know. Geography, not a strong point. It's like a two-hour flight from me. I don't know. I think this is considered the West Coast, no?

17:56Well, find the ocean. Can you see the ocean out the window, Ray? I'm going to go with no. I'm in the ocean. I would say I'm on the West Coast. Maybe while you're skiing. What one calls the Rockies. You know what brand does use Cognizant in some of their products is C4. Let's get you some. The energy drink brand that is one of the most or one of the fastest growing that we've seen in recent years. C4 is marketed by a company called Nutribolt. Nutribolt was in the news recently because they led a$90 million investment in a supplement brand called Bloom Nutrition. I think we're pretty familiar with Bloom Nutrition.

18:37I did a interview with the founders, Mari and Greg Llewellyn, a few episodes back. Really interesting company, interesting to hear about how they've leveraged TikTok and their popularity on TikTok and Instagram to develop a loyal fong of consumers, using e-commerce data and insights to land pretty big retailers like Target. I guess the thing that was really surprising to me was the amount of the investment, $90 million for a minority investment at that. Going big. Yeah, definitely not going home, but definitely going big. Yeah. I don't know. I just did not see this deal coming. John, your thoughts?

19:16Yeah, I mean, I totally saw it coming. No, I mean, I really like this partnership, whatever you want to call it. of these two brands just in that, you know, they sort of are, I mean, they definitely play in the same general space, but C4 is a very different brand and probably consumer based than Bloom. So it kind of gives them like a new horse in the race, but in a race that they're very, you know, familiar and successful in already. So I think it's pretty cool. Excited to see what happens. And Bloom is a beautiful brand with, you know, insane e-commerce potential. They're doing really well in e-commerce.

19:55Exactly. But if you want to scale that, then what do you think a bunch of that 90 million is going to go into? It's probably partially product and, you know, to be able to add more product to the mix. But some of that's going into the marketing budget. And C4 has crushed it in retail. So I think it makes sense to tap into e-commerce and maybe bring their capabilities in retail to Bloom. There's just like a lot of opportunity there. And they're both kind of in the supplement functional space. Yeah, they're putting the fun in functional. So Nutribolt's stake in Bloom Nutrition is a 20 % ownership stake, according to the article on BevNet.

20:35The article also noted that the$90 million financing has Deep Eddy Vodka founder Clayton Christopher and consumer investment firm Amberstone coming on board as well. Congratulations to all involved and particularly Mari and Greg Llewellyn. Way to go. Yeah. Also, a huge congratulations to Madeline Hayden, who is the founder of plant-based coffee creamer brand Nut Pods. We've known Madeline for a very long time. I remember when she used to come to our office in Watertown. It was really fun to see her. She used to come to our food and beverage education events. And it's just, I don't know. I always love this part of doing what we do, you know, when we see these bright-eyed founders.

21:21And, you know, there's a lot of skepticism and naysayers. And then just look what she's built. It's incredible. So she sold Nutpods, or Nutpods was sold to a Kroger-backed investment group called M. Pearl Rock. and details or terms of the deal were not disclosed, but not pods is in 15 ,000 retail stores. It's a top selling plant-based creamer brand with a natural retail, according to the company. And I don't know, Madeline, just whenever I think about her, I just, I always am happy. She is the best, right? She's just such a good person. And she's just always been positive about her brand. She's always had a smile on her face.

22:00She's never had anything negative to say about anyone. I just think it's amazing. What more is there to say about Madeline except she's the best? Yeah, she's like the sweetest human ever. Yeah. All right, let's get to new products. I have a really interesting new product that hasn't even hit the market yet. Ooh. HealthAid, as I mentioned, is part of the mandatory portfolio. And so it was leaked and it was also reported on BevNet that HealthAid is launching a new better-for-you soda. This one is called SunSip. sunsip is intended to compete with the olipops popping culture pops of the world their tagline is soda with benefits and it has five grams of sugar per 12 ounce can and this strawberry vanilla flavor in particular has 25 calories in total it's a booch pop 2.0 ray what's it like tell us well the interesting thing the first thing that someone from mandatory mentioned about this product is that it does not contain stevia.

23:03As we know, stevia is a very divisive natural sweetener, and it's something that people have tasted once and they'll never taste again because it's such an intense flavor. So this product is sweetened with a combination of apple juice, agave, cane sugar, and monk fruit, which is interesting. I tried the cherry cola variety and the monk fruit was very noticeable at the front of the palate. But as you took a few more sips of Sunsip, it became less noticeable and a better tasting product. Also, it doesn't taste like Olipop. It doesn't taste like pop. It doesn't taste like cultural pop. It has a very specific flavor onto itself.

23:49Does it taste like health aid? No, definitely not. And it doesn't have a kombucha base as well. So if you recall, HealthAid Pop, I believe, was their first attempt at a soda product. It came in a slim can. It just, for some reason, it didn't work. I think originally it was called Booch Pop. And then they changed it to HealthAid Pop. And then the whole thing just got discontinued entirely. Now just go to SunSip. It's cool. Yeah. Okay. Well, I don't know if I can bring a can home because I don't know if I'm checking a bag. But if I do, this one's yours, John Craven, you can talk about it. But SunSip is launching nationally at Whole Foods on February 1st.

24:25I spoke with the CEO, Chris Lansing. There's a lot of excitement internally about this product and its potential to really broaden the base of consumers for health aid. Can I do one? Yes, please. I don't know. Should I go for... I think you should do that one first. This one first? Yeah, yeah. Okay, well, this that I've got here is a new Southern Chili Crisp from a company called Red Clay. They're a hot sauce company in Charleston, South Carolina. And this... Founded by Molly Feining. There you go. Yep. This stuff is peanut-based. So it's peanut oil, peanuts, garlic, and shallot. It's pretty tasty stuff.

25:08Here, Mike, you want to try some? Yeah, I want to. Absolutely. This is dangerous here. Are you going to do that? just taking a spoonful and you're not going to put it on anything i neglected to bring any tasty snacks jackie this is how i eat chili grass yeah you're just going right from the jar this is how i do it i really like this stuff it's the peanut flavor is uh is definitely unique not 100 sure what i would do with it just yet but oh yeah just go for a full just nuke yourself mike it's super peanutty yeah good what is the name of the brand again red clay Red clay. Yes. And marketed as a Southern style chili crisp.

25:48So quite tasty. Highly recommend this stuff. Yeah, it's tasty. And while we're on the subject of hot sauces, I have the latest from Truff, which is their jalapeno lime black truffle infused hot sauce. This stuff is also, here, Mike, just keep going on hot sauce. Yeah, why not? This is a lot milder than most of the chili crisps. I mean, it's good. It kind of tastes more like a sauce than an actual hot sauce. I don't know. I tried putting this stuff on some tacos. It was pretty tasty. Does it taste like a peanut sauce? You know, like when you get Thai food? It's a little bit like that, but it's not quite as sweet or as thick.